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The Charter of the French language and its regulations govern the consultation of English-language content.

Operating Expenses

Operating expenses are expenses incurred to ensure the operation of a business. They include:

  • fixed costs;
  • management costs;
  • costs related to the operation and support of the business;
  • costs incurred for the purchase of office items;
  • costs incurred for the rental of office space, a business or equipment; and
  • costs related to the use of utilities.

If 90% or more of your operating expenses are incurred in the course of your commercial activities, you are entitled to an input tax credit (ITC) of 100% of the GST paid and an input tax refund (ITR) of 100% of the QST paid on the expenses.

If you carry on both taxable activities and exempt activities, you must apportion your expenses between the two types of activities. For this purpose, you must choose a fair and reasonable method and use it consistently for at least the duration of the fiscal year. Methods based on the allocation of space, time, cost or revenue may be used under certain conditions.


You use the ground floor of a building you own to operate a retail store (commercial activity) and the second floor to carry on an exempt activity. Your electricity bill for the entire building is $700 a month, plus $35 GST and $69.83 QST. You determine that 60% of the electricity is used for the retail store and 40% for your exempt activity on the second floor.

You can claim an ITC of $21 ($35 × 60%) and an ITR of $41.90 ($69.83 × 60%) for the portion of the building used in your commercial activities.

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